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And that's perfectly fine. But game developers are a small fractions of Rust developers.

Right, but it's this specific project that requires the latest Rust compiler, not Rust libraries in general.

I think most devs use rustup, not the distro supplied one.

Is rustc even in the repos? Should it (and cargo) be? Or should they just have rustup? I lean towards the latter

Some distros ship programs compiled with rust, and they do so using the version of rustc in the repo.

rustc is in pretty much every distro's repos at this point. They often have Cargo too. They sometimes, but not always, have rustup.